Brexit: A Colossal Mistake. Only the Immigration Issue Needs to Be Addressed.

Great Britain’s only big problem with the European Union is excessive immigration. Surely, there are also heated, justified complaints about the EU bureaucracy’s excessive, burdensome regulations, but those could be successfully negotiated along with the immigration problem while remaining in the EU, given that many other members of the EU have similar complaints. With Brexit, instead, Great Britain risks losing an enormous slice of its financial center, a major part of its economy, and having to endure trade complications with the EU, resulting in much slower economic growth. The net result of Brexit could well be a big negative for Great Britain. Hopefully, logic will prevail over populist demagogy before Brexit actually takes place, and solutions will be found with Great Britain remaining in the EU.

One immigration solution is to have all the EU members vote on immigration matters, with a strong majority required. It is not democratic to have one EU member decide on immigration unilaterally when such matters impact other members. Germany’s unilateral decision to admit one million refugees earlier this year is unfair to other members who could see many of those immigrants ultimately relocate from Germany since there is freedom of movement within the EU. Furthermore, with many EU nations suffering from high unemployment and budget constraints, large numbers of immigrants pose a serious economic burden, particularly when they are not well educated. An additional problem is societal, in the numerous cases where immigrants are not disposed to fully integrate in Western society, to fully embrace its laws, customs, and values such as human rights, and specifically equal rights for women, freedom of expression, and the prohibition to discriminate on the basis of religion. There should be no surprise amongst EU political leaders that xenophobia has spiked, particularly when struggling EU native citizens see great numbers of illegal immigrants and refugees receiving economic assistance and not integrating.

The European Union has strangely failed to protect its borders from illegal immigration, whether by land or by sea. Perhaps, the failure to implement effective border protection was due to a misguided desire to save money. Perhaps, it was due to a desire to help poverty stricken, desperate migrants and refugees. But the proper way to help migrants and refugees is not to allow large numbers of them to settle in the European Union. Rather, the proper way is to help their countries of origin develop economically and socially, through infrastructure assistance (including education from nursery through university) and business investments in a context of rule of law and full adherence to the United Nations Universal Declaration of Human Rights. In cases of civil war disruption, safe areas should be established within those countries for the war refugees, until peace returns. The ultimate result of such a policy would be an end to illegal immigration, to xenophobia, and authoritarian populism, and to much greater economic and social prosperity both in the EU and in the underdeveloped nations, as these transition first into developing nations with an optimistic future, and eventually into developed nations.

The rise of anti-EU sentiment, xenophobia, and even of fascist proclivities is due to the political incompetence of EU leadership, which has not only failed to prevent vast waves of illegal immigrants and refugees, but has also been incapable of preventing a long, deep recession with high unemployment in the Eurozone (those EU nations which gave up their traditional national currencies in favor of the euro in 2001), leading to a substantial decline in living standards for many EU citizens. The Eurozone economic leadership, led by the European Central Bank, has failed to understand that QE (quantitative easing) was needed not only to save many banks, but also to revive consumption in order to quickly end the recession and prevent unemployment from rising to record highs. That would have been easily accomplished through a big tax rebate for each and every Eurozone taxpayer (at least 3,000 euro’s) financed by the European Central Bank through QE back in 2011–2012 at the onset of the deep recession. Such tax rebates would have offset the decline in personal income and personal consumption deriving from the recession and rising unemployment.

Parenthetically, it is very important to understand that the euro itself has been a colossal mistake. Linking nations having very different economic potential with a common currency inevitably leads to problems, as a common currency requires a one-size-fits-all monetary policy and foreign exchange rate, and prevents nations from quickly adjusting to diminishing competitiveness through currency devaluation. For years, the euro foreign exchange rate was appropriate only for the German economy, certainly not for the economies of Greece, Italy, Spain, Portugal, and France. For them, the euro exchange rate was vastly overvalued, and that contributed to their deep recession. It should be no surprise that most Eurozone nations have endured by far the longest and most severe economic crisis in their long history, one which would never have occurred with their former national currencies and their own sovereign monetary policy. Not coincidentally, the EU nations which have kept their national currencies and their own sovereign monetary policy, such as Great Britain, escaped the deep recession of the Eurozone.

December 27, 2017

© Edward Sonnino 2017

Born and raised in New York City. Best course in college: history of art. Profession: economic forecaster and portfolio manager. Fluent in French and Italian.